In 2020 the budget for a machine shop showed overheads of P60,000 and a volume of activity

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In 2020 the budget for a machine shop showed overheads of P60,000 and a volume of activity of 12,000 machine hours. In January of 2020, the machine shop incurred P5,400 of overhead and 1,050 machine hours were worked.

Required:

a. Determine:

i. The predetermined absorption rate.

ii. The under/over absorption rate.

b. With the use of calculation, explain the factors that contributed to the under/over absorption of overheads.

Related Book For answer-question

Introduction to Finance Markets, Investments and Financial Management

ISBN: 978-1119398288

16th edition

Authors: Ronald W. Melicher, Edgar A. Norton

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Posted Date: Aug 19, 2022 05:52 AM

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In 2020 the budget for a machine shop showed overheads of P60,000 and a volume of activity

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a i Predetermined Absorbation Rate budgeted Overhead Budgeted Machine Hour... View the full answer

Introduction to Finance Markets, Investments and Financial Management

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